Ian Portsmouth: I     Catherine Swift: C

Ian: Welcome to the Business Coach Podcast, an advice-oriented series that tackles the top issues and opportunities facing Canada’s small businesses.  I’m your host, Ian Portsmouth, the Editor of PROFIT magazine. And we’ve developed this podcast in cooperation with BMO Bank of Montreal.

October 17th marks the start of small business week, 2010.  So it’s a good time to reflect on the legislative environment for small businesses in Canada, and who better for that job than Catherine Swift, the longtime President and CEO of the Canadian Federation of Independent Business.  Catherine joins me on the line from her office in Toronto.  And Catherine, welcome to the Business Coach Podcast.

Catherine: Thank you very much.

Ian: Now Catherine, I don’t know that you’re going to want to admit this, but you’ve been with the CFIB in an increasingly senior role since 1987.  The world has changed a heck of a lot since then.  How much better has the environment become for Canadian small businesses?

Catherine: Well, it definitely has become better for a number of different reasons.  The small business community has grown quite substantially over that period of time in Canada.  Right now it’s roughly half the economy, so obviously a pretty big chunk.  Plus, I’d like to think organizations like mine have also tried to keep things as close to the top of the priority list as possible.  We do see governments, financial institutions and others paying a more deliberate pro-active attention to small firms than I would say 30, 40 years ago.

Ian: So let’s talk specifically about government and the attention that it gives to small business.  Do you think that small business gets the notice it deserves from the federal government?

Catherine: Well, I think it depends on the government in power at the time because it certainly gets more than it used to.  And our current government is pretty aware of small businesses and the role they play and the importance of that role.  Again, naturally I’m a biased commentator so I’m going to say no, it never gets as much attention as it should get, but it is better than it used to be. 

And I think when you have a government and it doesn’t have to be, it’s not a partisan distinction.  When you have a government that actually has quite a few people that did run businesses in it themselves, that is extremely helpful because then they’ve lived it and they understand, they get it.  And so it’s a lot easier for us as an advocacy organization to deal with a government like that than one that doesn’t have that kind of background.

Ian: Now at the federal level, small business is actually a junior portfolio within Industry Canada, but it’s also split, it’s shared with tourism.  So the Minister of State for Small Business and Tourism has quite a bit of ground to cover there.  Would a discrete portfolio for a small business be of any help?

Catherine: I don’t really think so to be honest with you.  The important thing, I mean obviously we would deal with the Small Business Minister.  There hasn’t always been a Small Business Minister as you know.  It’s kind of ebbs and flows.  Some government decides to get rid of the portfolio, and then another one decides to recreate it, so we also deal very directly with the Minister of Finance, the Industry Minister, the Treasury Board, a number of the other sectoral portfolios if they’re appropriate at the time such as agriculture for example, fisheries because we’ve got members in every sector of the economy, so we tend to give it just about everything. 

And obviously the CRA is a big one because of the tax, you know, the tax man being a particularly problematic source of things for our members.  And also the human resources social development because they oversee EI and so on.  So it really isn’t that important to us to have this portfolio at all, but that being said, if there’s a good person in that portfolio they can be a terrific help.

Ian: So let’s talk about the person currently in that portfolio which has been a bit of a revolving door over the past 3 or 4 years.  Rob Moore is Canada’s newest Minister of State for Small Business and Tourism which he’s been in since January in 2010.  What are your early reviews of his performance?

Catherine: Well, we’ve had a very positive relationship with Rob, it’s his first cabinet position period, so he’s on a learning curve naturally.  But he’s very keen.  He does seem to get the issues very well.  He’s very accessible, and that’s always important with any minister or senior bureaucrat or whatever.  So we have had a very positive experience with him to date, and we had a very positive one with his predecessor who was Diane Ablonczy.  She did some fantastic work too, so I think they’ve both been good choices, and it’s still relatively early days for Rob.  But no, I anticipate a very good ongoing relationship with him.

Ian: Now we don’t have time to address all of the various provinces and territories with the same question.  But if you could pick the province that most pleases the CFIB for a lack of a better description, which province would it be?

Catherine: Well, it is a tough call because obviously there’s goods and bads everywhere.  But in terms of current governments, BC is doing pretty well.  Of course, the HST has been quite a kafuffle as you know, so I have to put that caveat in.  Saskatchewan, Brad Wall’s current administration definitely gets small business.  It doesn’t hurt that his father is a 35 plus year CFIB member either – just for the record. 

In terms of the worst, boy, that would be a tough one.  Nova Scotia is having some big challenges right now by heaping tons more taxes on businesses and individuals, and Ontario has actually not been particularly positive to small business with the current administration either, so.  But again, in every place there’s pros and cons and sometimes, you know, you just see the pros outweigh the cons a bit more.

Ian: Let’s talk about a few of the hot button issues on the CFIB’s plate right now.  You’ve been on a long crusade to reduce red tape for small business in this country. How far do you think we’ve come and what work still needs to be done?

Catherine: We’ve come a little ways. We at least now have much more consensus from governments and the political level notably, that work has to be done here. And there has been some progress made.  BC was a leader in this regard and it’s now being used as somewhat of a model for other jurisdictions.  The federal government has also made some progress.  What we really need, the thing we worry about with red tape is that one exercise gets done over a year or two, say, for example, and then they say oh, we’ve done that now. 

No, this is something that needs to be institutionalized.  We think it should be like a budget.  We should have them reporting every year on what they have accomplished because as we know, you can eliminate a bunch of regulations or duplications or so on, but if you then think you’re done, they’re just going to multiply again and you’re going to be right back where you started from or worse off.  That’s an ongoing major piece of work.

Ian: Now we’ve all heard that the cap on employer contributions to EI will come off soon, and the speculation of course is that those rates are going to rise.  Can you share with our audience a few more specifics about what is happening and what this could mean to small business?

Catherine: Yes.  Well, I don’t think it’s speculation because we know the extra revenue is already built into the federal budgetary process.  So it is a given unless something shocking happens in the interm.  What we forecast and I think we’ve got pretty good basis to do so is rates going up to the maximum amount and that’s 15 cents on the employee premium side and 21 cents on the employer premium side because the employer pays about 60 percent of the overall premium, and that’s for at least the next 4 to 5 years because that is the – under the current legislation – that is the maximum allowable increase. 

So we are very concerned about this and we’ve done some research factoring in those
kinds of cost increases, and we believe there will be a considerable hit on job creation because of that.  And let’s not forget too that CPP, remember there was that meeting of ministers back in PEI in the summer, early summer.  It’s all very speculative and there’s no kind of precision around it, but they’re also talking about increasing CPP premiums. 

So, you know, the payroll taxes are a big job killer and, you know, everybody acknowledges that, and that is one of our top five issues right now is to get some progress on the payroll tax hit in one way or another.  There could be offsets for training monies.  There could be a whole lot of ways to mitigate the negative impact of that on small businesses.  And because small businesses create the lion’s share of new employment it is much more of a small business issue than it is a big business issue.

Ian: What else are you working on at the CFIB right now?

Catherine: We’re doing a lot of work on pensions.  We believe there’s some really serious inequities out there, notably the public sector currently retires much earlier than the rest of the economy with much higher pensions which are off typically index to inflation with health benefits and so on.  We’ve seen what’s happened in Europe with countries like Greece which got so out of control in its public sector spending.  They basically are rendered bankrupt as a country, and we’ve seen all the serious problems they’ve had to face. 

Other European countries as well.  The US is also been in some pretty big trouble.  Some of its municipalities are effectively bankrupt, and we don’t want to end up there.  We’re not, I don’t believe we’re that far away now, so we would really like to see some serious work being done on the public sector pension issue and the fact that the rest of us are all getting taxed to the max to permit overly generous benefits and early retirements and on and on and on in the public sector. 

All we’re asking for really is fairness.  There should just be simple equity between the
private and public sectors, and that is not the case now.  So that’s one of the big
issues.  Of course the economy generally is always a concern.  We do a monthly survey of our members and they’ve turned out to be a very good predictor over the years.  Their confidence has improved, but there’s still a real tenuousness.  So we’re quite concerned and given that the US is still our largest trading partner, and we know they’re in big trouble economically, I think everybody is keeping a very close eye on what’s going on South of the border, and how it may well turn around and affect us. 

Other issues, we’re always looking at things like financing.  We’re looking at workers compensation at the provincial level which most workers comp boards across the country are effectively broke, and have massive unfunded liabilities.  Again, another payroll tax to be thrust upon small businesses.  So that’s just a handful.  But those are some of the key issues.

Ian: One more thing I wanted to ask about relates to trade.  There are so many organizations in Canada, institutions, governments, etc. that are encouraging small and mid-sized businesses to exploit export markets.  Funnily enough, a lot of those would be exporters don’t really trade outside their provincial boundaries due to many interprovincial trade barriers.  Is that another issue that you’re working on?

Catherine: It absolutely is.  The interprovinical trade issue has been around forever.  I can remember I’ve been here for 23 years as you mentioned at CSIB, and I’ve worked on it right from the day I started and we’re still working on it.  And the problem of course is the intransigence of individual provinces to not be provincial if you get my drift in the small ‘p’ provincial sense of the word. 

You know, they want to give preferential treatment to their own businesses in their jurisdictions and so on.  Mind you, we’ve seen some good progress with BC and Alberta, with their agreement.  And we’re seeing those two economies do very well as a result of it, so we’re very hopeful that given that we finally got somebody who’s made the foray, that we can see that multiply. 

I know Saskatchewan is thinking seriously right now about joining BC and Alberta with similar agreements and it just makes imminent sense.  And it has a great relationship with the red tape issue we mentioned earlier because if you can say get a business license in one province as a small business, and then basically be able to function across the country, isn’t that common sense?  You don’t have to renew something and often there’s licenses for every municipality. 

I mean our governments load up our businesses with insanely onerous, punitive regulation and, you know, there’s no upside to this other than I guess the business fills out another form and submits another check for a few hundred bucks.  So you know yes, if we could get rid of those things that would be huge for our productivity, and we’re always complaining in Canada that we don’t have the kind of productivity performance we’d like, and yet we’re shooting ourselves in the head here by these types of stupid regulations.

Ian: Absolutely, and that’s why the CFIB exists.  Do you want to tell our listeners how they can get involved?

Catherine: Absolutely.  We’re an exclusively member-funded organization.  We don’t accept any funds from any other sources.  We have about over 107,000 members across Canada, and if somebody wants to join they can do so on our web site which is at CFIB.ca.

Ian: Thank you, Catherine.

Catherine: My pleasure.

Ian: Catherine Swift is the President and CEO of the Canadian Federation of Independent Business.  She joined me on the phone from Toronto.  That’s it for another episode of the Business Coach Podcast.  Be sure to check out other episodes, which you can download from BMO.com/coach, PROFITguide.com and iTunes.  For other tools to help you build your business, visit the small business resources section on BMO.com.  Until next time, I am Ian Portsmouth, the Editor of PROFIT magazine, wishing you continued success.

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